Date: Sep 11 2017
Title: Air Freight Market Update Report for Week 37

Demand for airfreight space across the region eased somewhat last week although remains relatively strong compared to a year ago.  Taiwan and Korea continue to report heavy cargo flows that are impacting overall transit times for cargos originating elsewhere in the region. 

According to the International Air Transport Association (IATA) Industry-wide freight ton kilometers (FTKs) grew by 11.4% year-on-year in July, up slightly from 11.2% in June, and well ahead of the five and ten-year average rates (4.2% and 3.1%, respectively). Annual FTK growth has now been in double-digit territory for four of the past five months. Available freight ton kilometers (AFTKs) rose by 3.7% year-on-year in July – less than one-third of the corresponding pace of FTK growth and which explains why air carriers have been able to maintain aggressive rate levels.

International freight volumes flown by airlines based in Asia Pacific rose at a robust annual pace in July (12.0%). Volumes fell slightly in seasonally adjusted terms compared to June, but remained more than 3% higher than the level they reached in the rebound following the global financial crisis.

Hurricane Irma began impacting airport operations in Miami early Friday and will impair operations throughout the region over the weekend.

Following are highlights from around our Asian network.

Miami: With mandatory evacuations in effect for much of South Florida, carriers and airports rushed to secure their operations on Friday and began either restricting flights or closing entirely. As of late morning, 271 departures and 324 arrivals had been cancelled at MIA, representing more than half of the airport’s average daily schedule. Carriers began restricting cargo to non-perishable general commodities and mail in the morning. 

Bangladesh: Congestion associated with cargo screening issues have contributed to heavy cargo backlogs and have enabled air carriers to impose rate increases of 20 – 30% last week.
Airlines require booking minimum 7 days in advance.

Shanghai: There is adequate space to meet demand. Rates to US gateways are stable whereas rates to European gateways increased approximately 10% last week. 
Xiamen: Demand for space following the BRICS Summit has picked up. Most freighter operators (e.g., CX/NH/CI/CV) have resumed operations this week. Because of ongoing backlogs, carriers require 3 – 4 days advance booking.
Hong Kong: Strong and steady demand for space enabled air carriers to increase rates 15% last week. Advance booking is strongly recommended.

Delhi: There has been a surge in demand for space in advance of upcoming holidays. There is adequate space to meet demand; however, onward connections are experiencing delays. Transit times are running 4 to 7 days longer than normal to US gateways.  Rates are trending up.
Kolkata: Strong demand for space by exporters of leather and meat products have helped drive up rates. Available space is tight and advance booking is required. 
Bangalore: Available space to US gateways is very tight. Although carriers have not increased rates, most are only accepting cargo on Express rates.  
Mumbai: Flooding at the end of August has receded; however, a long que of trucks remains to be cleared.   

Indonesia: There is adequate space to meet demand and no reports of backlogs. Transit times to the US West and East Coasts are running 7 – 10 days. 

Korea: Strong volumes of transshipment cargo have contributed to very tight available space. LG is expected to begin shipping 500 – 600 tons of cargo per month until the end of the year. Rates to US and European gateways were increased on September 1st and carriers announced FSC increases in the range of $0.03 - $0.09/kg to be effective September 16th. 

Sri Lanka: Air export volumes remain strong for both local and transit cargos.  Available space to US and European gateways is critical.  

Taiwan: TPE is reporting cargo backlogs of approximately 130 tons. Transit cargo is experiencing delays of 6 – 7 days before onward forwarding.  Available space is particularly tight to JFK because of Motorola shipments forecast to be 60 tons/week for the months of September and October.   CI and BR are expected to increase rates to European gateways by 10% - 15% effective the middle of the month.

Thailand: Demand for space eased last week. Transit times are running longer than normal because of lingering congestion at some airline hubs.

Vietnam: Demand for space is expected to pick up following Vietnam’s national holidays that ran from September 2nd – 4th.  Airline capacity will be adversely impacted by a partial shutdown of SGN’s runways for construction. The construction which began August 30th is scheduled to last 45 days.

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